America’s debt, now at $16.4 trillion, is growing by about $1 trillion a year. Nearing its legal debt limit, the world’s most powerful nation is, incredibly, weeks away from defaulting for the second time in as many years. It should be obvious by now that it needs to take some drastic measures, no matter how painful, to tackle its debt problem.

But so far the U.S. has only buried its head in the sand. One solution that emerged last week to dodge the debt ceiling was to mint a trillion-dollar coin, which, when deposited in the Treasury, would allow America to pay its bills. First floated as a joke, it was being seriously discussed by economists and lawmakers as a kind of accounting trick to instantly boost the money supply without any punishing side effects. Debt-ceiling crisis averted, the government could simply sell more bonds, and melt down the coin. Another quick-fix proposal: for Washington to issue scrip, or IOUs, to pay its bills.

Proponents say these solutions are no more ridiculous than the artificially imposed debt ceiling and the political gamesmanship that has taken the U.S. budget hostage. That may be true, but in the absence of any other meaningful solutions—like spending cuts and tax increases—some of America’s biggest foreign lenders appear to be losing patience and faith. The foreign purchase of treasuries as a percentage of those issued has been in decline since 2008. China’s top credit rating agency, Dagong, put the U.S. on its “negative watch list” in December. The U.S. already lost its AAA rating in 2011.

President Barack Obama said this week that the idea the U.S. would default is absurd —it is “not a deadbeat nation,” he argued. But it does seems headed in that general direction.

The good news

The U.S. auto industry continues to roar back. Ford plans to hire 2,200 white-collar workers this year as it expands its lineup of cars, trucks and SUVs.

U.S. oil production reached its highest level in two decades this month due to a boom in unconventional sources like shale, meaning more domestic jobs and less overseas conflict.

China’s growth may have slowed, but there are still signs of life in one of the world’s most important economies. Exports surged 14 per cent last month, the most since May.

U.S. regulators are implementing new mortgage rules for American borrowers. No more risky teaser rates and “interest only” loans. A terrific idea, a few years too late.

Canadians may finally be dialling back their borrowing. Consumer debt grew 4.7 per cent in November compared to 4.9 per cent in October, according to Royal Bank of Canada.

Both the Canadian and the U.S. economies added jobs in December—39,800 and 155,000, respectively. Canada’s unemployment rate fell to 7.1 per cent, its lowest in four years.

The bad news

The unemployment rate in the eurozone hit a new record of 11.8 per cent, the highest level since the currency was established in 1999. Nearly 19 million people are out of work.

A drop in manufacturing is raising concerns that the British economy may be sliding back into recession. Factory output came in at just 0.3 per cent between October and November, well below expectations.

A big U.S. employer, Boeing, has orders for more than 800 of its 787 jets, but its first customers are less than thrilled after a string of mishaps ranging from fires to fuel leaks.

High-end jeweller Tiffany reported mediocre sales over the holidays while several of its middle-market competitors posted healthy gains. Do the wealthy know something the rest of us don’t?

CFOs at companies in Canada and the U.S. are growing less confident in the economy, according to a recent survey by Deloitte. The most pessimistic executives are Canadian.

Personal computer sales fell over the holidays for the first time in five years, as consumers gravitated to smartphones and tablets. With a cheaper iPhone rumoured to be in the works from archrival Apple, it’s not the Christmas present that Microsoft Corp. and its all-new Windows 8 desktop operating system was hoping for.

A businessman who paid $7 million for a former B.C. mining town in 2005 envisioned an “eco-village” for artists and spiritual types. But thanks to Canada’s energy boom, he’s now planning a liquefied natural gas refinery and shipping terminal instead.

The Big Mac used to be synonymous with McDonald’s, but after years of menu tinkering, young customers increasingly see it as just another burger. The chain hopes a Big Mac relaunch, with a major ad campaign this year, will whet appetites again.

The story of a Chinese home buyer with a suitcase full of cash is a common one in real estate circles. And it’s not just an urban legend. Officials at airports in Vancouver and Toronto seized nearly $13 million in cash from Chinese nationals last year—mostly tucked into suitcases and purses, according to the Wall Street Journal.

By the numbers

25 per cent: The annual return posted last year by Citadel, one of the world’s top hedge fund firms. The industry average return: closer to six per cent.

5,400: The number of jobs American Express plans to cut due to its travel business being hurt by Internet rivals.

$706 million: The value of MacDonald Dettwiler and Associates’ new contract with the Canadian Space Agency to build and launch three new surveillance satellites.

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About this author

Colin Campbell is the managing editor (news) at Maclean's. Since joining the magazine in 2005, he has also served as the foreign editor, business editor and a reporter covering everything from politics to sports.

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